The Bangladesh Tariff Commission has suggested the government for signing a free trade agreement with Gulf Cooperation Council to raise the country’s export significantly to six Arab nations. Though the BTC identified some problems with the benefits in materialising of the FTA, it recommended the government for going forward with the FTA with GCC countries considering the probable prospects of raising exports, commerce ministry officials told New Age.
They said that the expected benefits of signing the FTA with GCC countries — a union of six oil-rich Arab nations namely Saudi Arabia, United Arab Emirates, Qatar, Kuwait, Oman and Bahrain — would depend on whether Bangladeshi exporters could utilise the duty-free market access under the agreement.
Recently, the BTC submitted the study report to the commerce ministry identifying some prospects and problems in signing the proposed FTA.
The officials said the commerce ministry would now seek opinion from stakeholders, particularly exporters to move forward with the issue.
Bangladesh had been trying to get duty- and quota-free market access to Saudi Arabia since 2008. But Saudi Arabia suggested Bangladesh for approaching the GCC for the trade benefits as it cannot provide the benefit unilaterally to the country as it is a member of GCC customs union.
Following the suggestion, Bangladesh has taken the initiative to sign the FTA with the GCC.
Earlier, in another study the BTC primarily identified 190 products including apparel items for seeking duty- and quota-free market access for the products having great export potentials to the GCC countries.
In its recommendation, the BTC said that the government might take initiative to sign the FTA if it had opportunity to obtain DFQF market access or substantial tariff preference in most exportable products.
Bangladesh will have to ensure longer implementation period for liberalisation in trade in goods with comparatively shorter product coverage and flexible preferential rules of origin and a longer implementation period for liberalisation in trade in services and investment.
It also suggested that the proposed FTA should cover only three areas — trade in goods, trade in services and investment.
According to BTC findings, Bangladesh’s readymade garment export to the countries will increase significantly if DFQF facility can be obtained by signing the FTA as the countries have a market of $11 billion for RMG products.
In the financial year 2012-2013, Bangladesh exported RMG products worth only around $200 million to the countries while its total export was $470 million.
In the year, Bangladesh imported products worth around $3 billion from the six countries.
Bangladesh has also tremendous export potential in some other products including pharmaceuticals, footwear, ceramic and spices, it said.
Tariff reduction by signing the FTA on petroleum oil and other industrial raw materials like aluminium, iron and steel products may decrease production and trade cost of finished products which may increase competitiveness of the products of Bangladesh both in domestic and foreign markets, the study said.
There are also some problems in signing the proposed FTA as tariff reduction on petroleum products by Bangladesh may decrease revenue earnings of the government from the sector as in last year the government earned more than Tk 1,200 crore in revenue.
Currently, Bangladeshi exporters have to pay 5 per cent duty for all the selected items in the countries. So signing the FTA will not be beneficial if exporters cannot produce the products particularly RMG items which have demand in those markets.
The study also revealed that formation of the FTA might enhance possibility of human resources export to the GCC countries and ensure minimum working standard and wages for Bangladeshi expatriates since those are highly dependent on foreign workers.
-With New Age input
